Just finished reading the interview Krugman had with Paul Kedrosky, which Ben Solar pointed to: Shrewd'm: Shrewd'm: A Merry and Shrewd Investing Research and Education Community. Fascinating and scary. As Kedrosky point out this is a bubble with credit, real estate, technology and government influence aspects, a kinda super-bubble. Having invested through the dot com era I remember thinking "sure, Pets.com won't make it, but Intel will". What I hadn't understood was how many PCs Intel was selling to the pets.coms of the world and when they all went BK Intel also got hammered.

So the question today is how much is Google going to get hammered by the bursting of the AI bubble? They clearly are investing in AI and are probably building data centers (or contracting with others). One of Kedrosky's points is that the GPU chips are wearing out quite quickly (MTBF of 2-3 years), and not catastrophically, but marginally, just slowing down in non-obvious ways, so these are not long-lasting capital assets but wasting assets with a 2-3 year window. So it is not as if Google can just re-purpose these AI data centers into something else that will be economically beneficial to the company.

I don't have an idea how much money Google has spent on AI or, for that matter, how many long-term committments they've made to either the hardware (they've announced their own GPU chips) or the data centers. They clearly throw off massive amounts of cash from their search business and can afford to play with AI (if only as a defensive strategy) but are they betting the farm the way Nvidia is?

Rgds,
HH/Sean